The future for wood panel manufacturing in the UK

1. The future for wood panel manufacturing in the UK Alastair Kerr Director General Wood Panel Industries Federation

2. The future for wood panel manufacturing in the UK • Industry Overview • Wood Panels: ubiquitous but generally unseen • Wood supply and the impact of energy policy

3. The Wood Panel Industry in the UK • 7 Manufacturing sites • 8700 FTE jobs • Turnover £520million • Output 3.4Mm³ • Supply two thirds of the UK consumption. • Wood Consumption 4.1Mt • Largest recycler of wood

4. The Wood Panel Industry in the UK

10. Wood Inputs

11. Wood Inputs

12. Impact of Energy - Policy Drivers • Renewables Obligation • Renewable Heat Incentive (2011) • Climate Change Levy • Carbon Reduction Commitment • EU ETS

13. UK wood fired electricity plant - August 2011 Overlaid with location of wood panel plants Forth Dundee 100MW Forth Rosyth 100MW RWE Markinch 50MW Forth Grangemouth 100MW Forth Leith 200MW UPM Irvine 26MW RES Blyth 100MW MGT Tyne 300MW Stevens Croft 44MW MGT Teesside 300MW Balcas 3MW Sembcorp 30MW Tadcaster brewery 3MW Iggesund 50MW Drax Selby 300MW SSE Ferrybridge 95MW Dalkia Pollington 52MW Royal Brewery 3MW Anglesey Aluminium 300MW Drax Immingham 300MW UPM Shotton 20MW RWE Stallingborough 65MW Eccleshall 3MW Peterborough 79MW Express Tilbury 60MW Prenergy 300MW Western Wood 14MW Nevis Power 50MW RWE Tilbury 750MW Helius Avonmouth 100MW SSE Slough 35MW Eon Portbury Dock 100MW Helius Southamption 100MW Operational 181 MW – 1.8 million tonnes timber Approved 2404MW – 24 million tonnes timber Planning application submitted 1547 MW – 15.5 million tonnes timber Total potential timber requirement 41.3 million tonnes Panel manufacturing site

14. Impact of Energy – Scale of demand

15. Impact of Energy – no excess wood available in the UK

16. Imported biomass will therefore set price levels… long term trend price estimate ~ £115/bdt

17. With subsidies in place, electricity generation using UK forests can only have a negative outcome • Switch from panels to burning increases carbon by 6M tonnes p.a. • Over the cycle of re-growth this is >200M tonnes • State Aid subsidies will be £300-400 million p.a. • State Aid over cycle of re-growth will be circa £12 billion! • That’s for the 4Mt of wood used in Panelboard!

18. With subsidies in place, electricity generation using UK forests can only have a negative outcome cont. • Wood costs will treble and will be passed on • Manufacturing investment will be lost • Vital manufacturing jobs will be lost (overall net loss) • Negative impact on the balance of payments • All to deliver less than 0.5% of UK electricity needs

19. The Solution • In respect of electricity only link the subsidy to transport • Link subsidy to minimum efficiency standards Benefits • Levels the playing field but doesn’t prevent wood burning electricity plant from being built or UK wood from being used for electricity • Encourages support for CHP • Doesn’t impact on heat only – (RHI) • Doesn’t impact on existing plant

20. Level Playing Field